It would be interesting to start this discussion by briefly defining cost leadership and then describing its techniques and their importance. According to Atrill and McLaney (2012, pp. 347) competitive advantage through cost leadership is accomplished when a company can successfully compete on price. The authors further clarify that competitiveness in the long term is strongly linked to price competitiveness and cost management. In fact, the authors establish a cause and consequence relationship between strategic cost management and competitive pricing. The application of quality management and production processes optimization which also includes the utilization of resources more efficiently than its competitors, a company can achieve competitive advantage through cost leadership.

Some of the techniques that a company can use in order to manage costs are total life cycle costing; target costing; Kaizen costing; economies of scale and buying in bulks. According to Atrill and McLaney (2012, pp. 346) total life cycle costing comprehends to every cost incurred not only during the production stage but also in all earlier and after production stages. A product continues to accumulate costs when being distributed and going through the after sales services. When it comes to target costing one can describe it as being a market based way of managing costs. The authors further explain that in order to reach the target cost it is of fundamental importance to take into account every aspect of cost reduction.

The Kaizen costing is all about optimizing products design and production processes. The authors highlight that in order to accomplish the desired cost reduction, it is essential that the employees are involved. The participation of all members of the production teams might also contribute to a more dynamic work environment, promoting knowledge sharing and motivation through learning. When talking about small business, one can also cite economy of scale as a way of cost management. The more products a company produces the lower will be the price of each unit. Last but not least, buying in bulk can also have a tremendous impact on costs. Since the more the enterprise buys the more the supplies will be willing to offer lower prices for the raw material.

The incorporation of the life cycle approach into cost management is relevant since it takes into consideration all the phases of cost accumulation. It is also extremely useful when initial costs and operating costs have to be compared in order to choose the one that increases net savings to its best results.

According to Atrill and McLaney (2012, pp. 33) the major differences that characterize financial accounting and management accounting are often related to the groups of people each area intends to address information.

Further explaining, the authors suggest that management accounting will focus on providing information for those within the company. On the other hand, financial accounting will address information to those who don’t make part of the board of directors, but are interested in the company’s activities. Management accounting reports tend to be very detailed and of high confidentiality while financial accounting reports are meant to be public and offer a general overview of the company’s financial health. Another important point that differs between management accounting and financial accounting is the degree of objectivity. While management accounting might produce reports of financial and non-financial nature, financial accounting will focus on producing objective reports, always passive of verification due to accounting regulations.

Regarding the usefulness of management and financial accounting during the decision making process, one might analyze management accounting as a field that collects data, converts it into information that will be transformed into knowledge and then the knowledge created will be used during the decision making process. Atrill and McLaney (2012, pp. 32) corroborate this thought when they mentioned that management accounting will produce financial and non-financial information such as physical volumes of inventories, sales orders received or new products launched; it is due to this non-financial information yet extremely relevant to managers that planning, evaluation and control can be exerted in a company. One can also say that management accounting is more dynamic while finance accounting is a picture of the past. Following this line of thought based on cause and consequence, I strongly believe that finance accounting is a reflect or a consequence of management accounting and both are linked.

The efficiency and effectiveness of data systems will play an important role on the creation and maintenance of information. Not only information technology is of fundamental importance but also the overall knowledge creation and management will influence in management accounting reports. Mubarak (2013, pp. 7) emphasizes the importance of managers and middle management being able to differentiate knowledge, information and data. In addition, the author clarifies that the way knowledge is acquired, stored, processed, distributed and used will reflect on management accounting reports and the abilities of a company when accomplishing its objectives. I strongly believe that the only way a company could in this day and age cope with managers who have little knowledge of accounting is offering training and promoting continued education. There is no possible way to remain competitive without timely data analysis and decision making.

Ralston (2008, pp.28,29) defines convergence and divergence as opposites tendencies when it comes to values formation and evolution. I do not believe those theories would be as efficient as the crossvergence theory in explaining complex relationships between headquarters and subsidiaries. Convergence and divergence assume extreme positions, in which a given society would or would not be influenced by factors such as technology and that technology itself would reshape values. Let’s compare Ralston’s convergence theory with economics convergence theory or The Catch Up Effect. The catch up growth consists of poor economies growing faster than rich economies and eventually converging with regards to per capita income. However, not every poor country would benefit from it. In order to achieve an income convergence a given country should have the abilities of absorbing new technology, attracting foreign direct investment and participating in global markets. Thus, I strongly believe that more complex variables shape and reshape values; technology might be one factor influencing people and consequently relationships, but surely not the only one. Abramovitiz & David (1994,pp.4)

With regards to crossvergence theory, it considers several important macro and micro predictors of values development. In other words, socio cultural aspects and business ideology would play significant role when it comes to values formation and evolution. Ralston (2008, pp. 35).

The author’s framework is based on many aspects of Hofstede’s cultural analysis model such as individualism versus collectivism dimensions. It is of fundamental importance the analysis of national culture in order to bring about more effective and efficient integration between headquarters and subsidiaries. However, the industry standards, business environment situation and organizational culture must also be carefully taken into account in order not only to have a successful integration process but also minimize risks.

I would consider applying Hofstede’s cultural analysis framework and Oosthuizen’s “The Core Value” framework during headquarter and subsidiary integration process. I find Oosthuizen’s Framework very helpful when it comes to core values and learned values observations and comparisons. For instance, a manager could use those two dimensions in order to identify and compare his/her core and learned values with the core and learned values of the members of the subsidiary where he is conducting business.

According to Oosthuizen (2004, pp.68) core values are universal. Therefore, exercising core and learned values self-awareness could help managers to align more efficiently organizational and individual’s goals. In addition, when marketing a product, Oosthuizen’s Core Value Model helps to effectively establish local and global presence through the incorporation of local and universal symbols, generating multicultural communication empathy. Hofstede’s framework provides important parameters of analysis that can be converted into strategic information inside an organization, facilitating the relationship between headquarters and subsidiaries.

Culture is an important variable to be analyzed in the international business field and it can affect a company in several ways such as strategy definition, organization design, foreign investment decisions, human resources management, marketing management, supply chain, accounting, taxation and many other areas. However, according to Shenkar and Luo (2008, pp. 157), culture isn’t able to provide explanation for every phenomenon since non-cultural environmental variables can also greatly influence individuals and groups.

Therefore, the definition of culture and its measurability; the influence of cultural exchange; the existence of complex cultural interactions in the business scenario; are some of the motives in which comparative analysis of culture for management purposes is been sharply questioned. Yet, Mead and Andrews (2009, pp.57) further clarify that comparative methods of cultural analysis generate controversies since their reference frame is not definite and the weight attributed to cultural values differ significantly across borders.

Culture has paradoxical aspects. On one hand it can take centuries to change, but on the other hand it can change within decades. Hamamura (2009, pp.4)

Many cultural changes have been happening; for instance, the role of women in the US, raise of individualism in Japan and the consequences of globalization such as the influence of American brands in countries like Brazil and India. It is interesting to observe English words being incorporated into Brazilian Portuguese. Another interesting example is the Matsushita’s changing employment policies. The traditional Japanese company, known for having a ‘lifetime employment policy’ had to change its policy due to decreasing revenues, losses and slowdown in the global economy. The lifetime employment policy is known to be part of the Japanese style system and due to internal and external variables it had to be changed inside Matsushita company. Gupta and Sirisha (2003)

IBM Australia is an example on how managers should understand and forecast changes regarding values and cultural norms. Lee (2011) states that IBM frequently applies an opinion survey in order to embody business interpretation of cultural diversity. Education and awareness of different cultures is one of IBM focus, since it provides training and workshops through its own professional development of business culture studies. It consists of intranet based material on how to successfully conduct business with foreign partners.

It can be concluded that managers need a flexible approach when analyzing cultural aspects, understanding that each individual has unique features, respecting and learning from them. Moreover globalization has undermined the premises of the comparative analysis of culture because management practices involve different values not just culture. Lee (2011)

Hanamura, T. (2009) ‘ Are cultures becoming individualistic? A cross temporal comparison of individualism-collectivism in the United States and Japan’ Personality and Social Psychology Review 16 (1) 4-24